U.S. dollar near four-year lows
The dollar index was at 95.964 after declining more than 1% in the previous session when it hit a four-year low of 95.566
The U.S. dollar was grappling with a “crisis of confidence” as it struggled near four-year lows on Wednesday after President Donald Trump brushed off its recent weakness, exacerbating the dollar selling and lifting the yen, euro and sterling.
The euro breached past the $1.2 level for the first time since 2021 and was at $1.2015, bit weaker on the day, while sterling was also near its highest level since 2021 at $1.3823 in early Asian hours.
The dollar index was at 95.964 after declining more than 1% in the previous session when it hit a four-year low of 95.566.
Trump said on Tuesday the value of the dollar was “great”, when asked whether he thought it had declined too much. Traders took his comments as a signal to sell the U.S. currency aggressively.
Trump’s comments were not exactly new, but they came at a time when the dollar has been under pressure as traders braced for a possible coordinated currency intervention by U.S. and Japanese authorities to stabilize the yen.
It shows there’s a crisis of confidence in the U.S. dollar and it would appear that while the Trump administration sticks with its erratic trade, foreign and economic policy, this weakness could persist, said Kyle Rodda, a senior market analyst at Capital.com.
The dollar dropped more than 9% in 2025 and has started the year on the back foot, already down nearly 2.3% in January as Trump’s erratic approach to trade and international diplomacy, fears over the U.S. central bank’s independence and huge increases in public spending rattled investors.
The weak dollar flies in the face of otherwise strong fundamentals. The U.S. economy remains exceptional and the dollar should be reflecting that, said Rodda. But because of Trump’s behaviour, it’s not.
Investors’ focus will be on the central bank’s policy decision later in the day, where the central bank is expected to stand pat in a pause that investors see lasting beyond U.S. central bank chief Jerome Powell’s final meetings in March and April.